A pair of former ArthroCare senior executives are in the hot seat for their alleged roles in a securities fraud scheme that cost shareholders $400 million.

Former ArthroCare (NSDQ:ARTC) senior executives John Raffle and David Applegate were arrested yesterday morning for alleged roles in a securities fraud scheme that cost shareholders more than $400 million.

The U.S. Justice Dept. this week unsealed a 16-count indictment against Raffle, former senior vice president of ArthroCare's strategies business units, and Applegate, former SVP in charge of ArthoCare's spine division.

The federal agency accused the pair of inflating the company's earnings by 10s of millions of dollars, charging them with 1 count of conspiracy to commit fraud, 4 counts of wire fraud, 8 counts of mail fraud and 3 counts of securities fraud, according to a DOJ notice.